Corporate Crime & Investigations Update - 11 November 2016

Included in this issue: Rio Tinto suspends senior executive over bribery investigation; Samsung raided in political corruption probe; UK to probe 22 people over Panama Papers tax evasion probe and more...

Bribery and Corruption

Rio Tinto suspends senior executive over bribery investigation

Rio Tinto has suspended its Head of Energy and Minerals Division, Alan Davies and accepted the resignation of its Head of Legal and Regulatory Affairs, Debra Valentine, in respect of its investigation into $10.5 million of payments made in 2011 to a consultant in Guinea in relation to its Simandou iron ore project.

It is understood that the company has alerted the US Department of Justice and UK Serious Fraud Office and "is in the process of contacting the Australian authorities" in relation to this issue.

Samsung raided in political corruption probe

South Korean prosecutors have raided the offices of Samsung Electronics in connection with their ongoing investigation into allegations that Choi Soon-sil, an old friend of President Park Geun-hye, used this relationship to influence state affairs over an extended period.

The particular allegations levelled against Samsung are that they gave £2.5 million to a company co-owned by Choi Soon-sil and her daughter, to pay for Choi Soon-sil daughter's equestrian training in Germany.

Money Laundering

UK to probe 22 people over Panama Papers tax evasion probe

On 8 November 2016, the Chancellor of the Exchequer, Philip Hammond, and the Home Secretary, Amber Rudd, published an update on the work of the Panama Papers Taskforce.

It is understood that the Task Force, which is made up of the Financial Conduct Authority, the Serious Fraud Office and the National Crime Agency, has, among other things, opened civil and criminal investigations into 22 individuals.

The Taskforce has also established a Joint Financial Analysis Centre to develop "cutting edge software tools and techniques, ensuring the Taskforce has access to the very best information from which to work."

Fraud

Flash crash trader pleads guilty after extradition to the US

Navinder Sarao, the British trader accused of triggering the Wall Street 'Flash Crash' and causing billions of dollars of losses from his home in Hounslow London, pleaded guilty to wire fraud and spoofing.

Mr. Sarao agreed to pay the US government $12.8 million (£10.3 million), which represents the amount it is alleged he earned from illegal trading, and could face up to 30 years imprisonment for his role in the crash.

Tesco Bank freezes transactions after cash taken from 20,000 accounts

It is reported that Tesco Bank has frozen online transactions and pledged to refund the 20,000 customers who had money stolen from them by cyber-thieves.

It is understood that the incident is the "…first time such a large group of UK bank customers have lost money as a result of a single cyber-crime incident…" and that a number of UK authorities are monitoring the matter.

Total to fund oil venture in Euros to avoid Sanctions

French-based oil company Total have announced plans to invest in a development of the world’s largest gas field, based in Iran. It is reported that this will make Total the first western energy company to invest in energy in Tehran since international restrictions on Iran's nuclear program were lifted earlier this year.

Financial Regulation

FCA prohibits six individuals for their part in unauthorised collective investment scheme

Six individuals have been prohibited from performing any function in relation to any regulated activity for their parts in the operation of an unauthorised collective investment scheme which led to over 100 investors losing just under £4.3 million.

Company fined for breaching its permit

A London waste company has been fined for breaking the rules set out in its permit. The company pleaded guilty to the offences and was fined £15,000, ordered to pay £13,878 in costs and a victim surcharge of £120.

Health and Safety

Construction Firms fined more than £1 million

Three construction firms have been fined after a worker was killed when he fell 16 metres from a temporary platform onto a concrete staircase. A second worker, who also fell from the platform, was seriously injured and was unable to return to work for three years.

An investigation found that the platform consisted of unsuitable joist hangers and that other unsafe platforms had also been constructed on the site. St James Group Limited, the principal contractor, pleaded guilty to breaching Regulation 22(1)(a) of the Construction (Design and Management) Regulations 2007, and was fined £600,000.

Mitchellson Formwork and Civil Engineering Ltd, the contractors responsible for constructing the platforms, pleaded guilty to breaching Regulation 13(2) of the CDM regulations 2007, and was fined £400,000.

Construction Ltd, a site agent who assisted with managing the work, was found guilty at an earlier hearing on 4 July 2016 of breaching Regulations 13(2), and 28(2) of the CDM Regulations 2007, and was fined £20,000.

Chemical Company fined £3million in relation to release of toxic vapour

A chemical company has been fined after one worker was killed and another was left with irreversible lung damage after being "overcome by a toxic vapour cloud".

A build-up of the chemical Titanium Tetrachloride came into contact with water to create a violent reaction which resulted in the formation of a vapour cloud at the Cristal Pigment UK Limited plant in Grimsby in 2010. The incident caused shipping lanes on the river Humber to be closed for a number of hours due to the cloud drifting several metres from the plant.

The following year there was another uncontrolled release of toxic vapour during the cleaning of a redundant vessel.

Cristal Pigment UK Ltd pleaded guilty to the following charges: Sections 2(1) and 3(1) of the Health and Safety at Work etc. Act 1974, for the 2010 incident and also Regulation 4 of the Control of Major Accident Hazards Regulations 1999 for the 2011 incident.

The company was fined £1.8 million and £600,000 for the 2010 charges and £600,000 for the charge associated with the incident in 2011.